Commercial office transactions in Melbourne's CBD have reached $1.8 billion and may hit a record $2.25 billion peak by year's end, research from Jones Lang LaSalle shows.
Total transaction volumes for properties worth more than $5 million have reached their highest level in 25 years, driven by strong investor demand despite perceptions of "lean" activity this year, JLL head of capital markets Robert Anderson said.
"A lot of people feel it's been quite a lean year but actually it's a record breaker," he said. "A lot of the transactions have been done quietly off-market or without being advertised."
The majority of deals had been off-market with local buyers playing a greater role than expected, given the weight of offshore capital looking to invest in Australia, he said.
Significant deals this year include 567 Collins Street ($462 million), 206 Bourke Street ($105 million), 8 Exhibition Street ($320 million), Building 3, 735 Collins Street ($279 million), 90 Collins Street ($170 million) and 313 Spencer Street ($113 million).
JLL's breakdown of transactions shows domestic buyers account for 52 per cent of the year-to-date volumes, followed by Singaporeans (27 per cent), Chinese (6 per cent) and US investors (6 per cent).
"There is a bit of Chinese money around, not doubt about it," he said. "They're not as significant, though, in total volume dollars as what you might think."
Knight Frank's commercial sales managing director Paul Henley said there had been a re-emergence of AREITs this year that had purchased about $401 million of CBD assets.
Investment activity was largely focused on the CBD but as the economic outlook improved investors were likely to "move up the risk curve" and look for opportunities in fringe and suburban markets, he said.
Knight Frank calculated there had been a record $433 million spent on suburban office sales so far this year. Knight Frank's tally of total office sales across all Melbourne markets was $2.06 billion. Sales for the year to date were 36 per cent higher than in 2012, it estimated.
JLL's research manager Kimberley Paterson said investment yields had tightened. "Prime yields have tightened by 25 basis points at the upper end of the range to 6.25 per cent in 2013 from 12 months earlier," he said.
The December quarter also looks solid, both agencies said, with several transactions to be completed and offshore deals in the pipeline.
"Volumes could easily hit $2.25 billion given major transactions such as 367 Collins Street and 485 La Trobe Street have a combined potential to wrap up at circa $400 million," Mr Anderson said.